$655B Africa’s External Debt: Matters Arising and The Lamentations of AG

The African Group, has expressed lamentation over the external debt of more than $655 billion  of the African continent.

The African Group said the development underscored a serious barrier to the United Nations shared goals, particularly SDG 10, which aimed to reduce inequality within and among countries.

While making a presentation during the United Nations General Assembly (UNGA) Sustainability Week in New York, United States,the African group stated that the week not only marked the unified commitment to sustainable economic activities, but also harmonized with Africa’s efforts under the African Continental Free Trade Area (AfCFTA) to boost intra-African trade and integrate sustainability into our economic growth.

Speaking during the ‘High Level Thematic Debate on Debt Sustainability and Socio-Economic Equality for All,’ the Permanent Representative of Angola to the United Nations, Ambassador Francisco Jose Da Cruz, acknowledged that the African Group stands as a testament to the global imperative of economic integration, underscoring the collaborative efforts to transform the world for the better and ensure  everyone is carried along.

The Angolan Permanent Representative noted that “Africa’s external debt, which significantly exceeds $655 billion, alongside inflation that has seen rates peak dramatically, underscores a critical barrier to our shared goals, particularly SDG 10. These financial burdens are not unique to our continent but showcases challenges faced across many developing regions, where high debt service costs and economic instability restricts the capacity to invest in sustainable development.

The African Group further admitted that unless concrete counter measures were taken, Africa’s debt trajectory is projected to increase because of the surge in government spending to mitigate the socioeconomic consequences of the current crises. In his words, he said,
“Addressing debt distress, debt sustainability, extending debt relief, debt suspension and cancelation are matters of great importance to the African Group, and require comprehensive medium and long-term solutions.
“The challenges we face with debt are intensified by global economic pressures, particularly in the sectors of energy and food. Addressing these challenges requires a coordinated global response, combining robust monetary policies with comprehensive fiscal strategies. Our resolve to address these issues is aligned with the aspirations of the 2030 Agenda for Sustainable Development, emphasizing the need for reforms within the global financial system to promote sustainable growth and development for all nations.
“The debt crisis currently facing African countries has been aggravated by the inability of International Financial Institutions to tackle the current unforseen economic challenges. Facing the current debt crisis requires making radical reforms to the international financial architecture.”

The African Group however reassured the commitment to reforming current relevant international frameworks.

The group also called upon member states to support the establishment of a United Nations Framework Convention on Tax, aiming to establish a fairer global tax system and to curb illicit financial flows.

These systems form the vital bedrock of prosperity, equality and hope for every country.

Guterres also said now should be a period of increased investments in the systems.

“Increasingly violent weather is battering communities and economies.

“The global economy is crawling to the end of its slowest 5-year growth period since the early 1990s.

“The COVID-19 pandemic and the global impact of the war in Ukraine slammed the brakes on growth and exhausted fiscal space.

“Before developing countries could catch their breath, a global cost-of-living crisis and post-pandemic inflationary shock set in. Today, we face an estimated financing gap of up to US $4 trillion annually to reach the Sustainable Development Goals by 2030,” Guterres also said.

On his part, the President of the 78th Session of the UNGA, Dennis Francis, said the debate stemmed from the realization that without first tackling the debt problem, principally affecting countries in special situations in the Global South, all that the United Nations seek to accomplish in the context of global development, including the SDGs, will remain a far-fetched mirage.

“It is precisely for that reason that I deemed it tactically appropriate to open the week with a discussion on this crucial matter: the overload of debt, which will be followed in sequence by conversations on tourism; sustainable transport; resilience in infrastructure connectivity; and finally, a Global Stock take marking the completion of the UN Decade of Sustainable Energy for All,” Francis said.

Francis also said the debt crisis is, in fact, a development crisis, and one that permeates the Global South.

In its statement, the G77 said the debt challenges of developing countries remained elevated with the external debt reaching a record level of USD 11. 4 trillion in 2022, an increase of 1.9 percent.

“This has resulted in debt service burdens, including the high debt service costs that crowd out vital investments and constrain progress towards the achievement of the Sustainable Development Goals. In this regard, these unsustainable debt burdens in developing countries are stretching the social safety nets, causing socioeconomic distress, and constraining the achievement of sustainable development, while the multilateral response has been subdued, considering the severity of the situation,” the G77 said.